# The State of ESG Regulation in the Gulf - GCC-wide report

> A single, comparable read on how sustainability disclosure is maturing across the six GCC states - who is leading, who is catching up, and where the whole region is heading over the next two years.

- Reading time: 10 min read
- Last verified: 2025-06-01
- Page: https://gccesgtracker.com/state-of-the-nation/report

## Executive summary

The Gulf is in the middle of a decisive shift from voluntary, comply-or-explain sustainability reporting toward mandatory, assured and internationally aligned climate disclosure. The direction of travel is consistent across all six states; only the pace differs.

The UAE leads the region, having moved first on net zero, first to host a COP, and first to place a federal climate law on the statute book. Saudi Arabia, Qatar and Bahrain form a developing middle tier where policy momentum is running ahead of formal disclosure rules, while Oman and Kuwait are earlier-stage but moving deliberately toward mandatory frameworks.

Every market shares the same underlying tension: reconciling hydrocarbon-anchored economies with credible net-zero pathways. The common answer is a mix of renewables at scale, carbon capture and a circular-carbon approach, financed increasingly through green bonds, sukuk and emerging carbon markets.

For companies operating regionally, the strategic implication is uniform: treat climate disclosure as a compliance function with audit-grade data requirements, not a communications exercise. The markets that got a head start on voluntary reporting are now setting the pace on making it binding.

## Key findings

- Jurisdictions tracked: 6 - The full GCC - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
- Climate targets: 6 of 6 - Every state has a net-zero or headline emissions target; net-zero horizons cluster on 2050 and 2060.
- Direction of travel: Voluntary to mandatory - Comply-or-explain guidance is progressively hardening into enforceable obligation.
- Shared framework: ISSB / IFRS S1-S2 - Convergence on the international baseline is the clearest cross-border trend.

## Country comparison

- UAE: maturity Advanced; trend Accelerating; Net zero by 2050; vision We the UAE 2031 / Green Agenda 2030
- Bahrain: maturity Developing; trend Steady; Net zero by 2060; vision Bahrain Economic Vision 2030
- Qatar: maturity Developing; trend Steady; -25% emissions by 2030; vision Qatar National Vision 2030
- Saudi Arabia: maturity Developing; trend Accelerating; Net zero by 2060; vision Vision 2030 / Saudi Green Initiative
- Kuwait: maturity Emerging; trend Steady; Economy-wide net zero by 2060; vision New Kuwait / Vision 2035
- Oman: maturity Emerging; trend Accelerating; Net zero by 2050; vision Oman Vision 2040

## Convergence on an international baseline

The single most important cross-border trend is convergence on the ISSB's IFRS S1 and S2 standards. Where Gulf exchanges once issued bespoke, locally authored ESG metric lists, the centre of gravity is now the international baseline, layered on top of legacy TCFD and GRI references. This matters because it makes disclosure comparable across borders and legible to the global investors the region is courting.

Adoption is uneven but directionally consistent. The largest issuers in every market - national oil companies, major banks, utilities and sovereign-linked entities - are furthest along, increasingly obtaining third-party assurance over selected metrics. The challenge everywhere is the same: extending credible, decision-useful reporting beyond the blue-chip tier into mid-caps, family businesses and the wider private sector.

## From voluntary guidance to binding obligation

Almost every GCC market began with voluntary, exchange-led disclosure guidance - Qatar in 2016, the UAE and later others on a comply-or-explain basis. The next phase, already visible, is the hardening of that guidance into mandate. The UAE's federal climate law is the clearest example: it moves the country beyond capital-markets guidance into economy-wide obligation backed by penalties.

Central banks are a parallel and often faster-moving lever. Supervisory expectations for climate-related financial risk - aligned with Basel and NGFS direction - are being built into the prudential frameworks of the region's monetary authorities, pulling banks, and through them the real economy, toward climate integration ahead of formal corporate mandates.

## The transition tension

Every Gulf economy carries the same structural tension: fiscal bases and exports remain anchored in hydrocarbons, even as each commits to net zero. The shared response leans on a circular-carbon approach - carbon capture, utilisation and storage - alongside renewables at scale, rather than rapid demand destruction. The credibility of every national pathway hinges on whether those technologies deliver.

This is not resistance to the transition so much as an attempt to shape it. Hosting COP28, running the world's largest voluntary carbon-credit auctions, and building giga-scale green-hydrogen projects are all bids to be producers of clean energy and low-carbon molecules, not merely decarbonising oil exporters.

## Sustainable finance as the accelerant

Capital markets are doing much of the heavy lifting. Green and sustainability-linked bonds and sukuk are now issued regularly out of Dubai, Abu Dhabi and Riyadh, and the region is building market infrastructure - green-fund domiciles, carbon exchanges and sustainable-finance rulebooks - rather than financing individual projects in isolation.

Green sukuk is a distinctively regional innovation, marrying Islamic finance with climate objectives, and it gives the Gulf a differentiated role in global sustainable capital markets. As banks begin to price transition risk into credit and capital allocation, access to and cost of capital increasingly reflect sustainability performance - a powerful lever for pulling the real economy along.

## Outlook

Expect the regional centre of gravity to keep shifting from voluntary to mandatory. Implementing regulations under new climate laws, tighter alignment of exchange guidance with the ISSB, and rising assurance expectations should progressively harden comply-or-explain regimes into enforceable obligation across the tier.

The gap between the flagship issuers and the median company remains the defining challenge in every market. The next phase of progress will be measured less by new headline commitments and more by the breadth and quality of disclosure - assured Scope 1 and 2 data as standard, and credible Scope 3 becoming the frontier.

For companies operating across the Gulf, sustainability capability is becoming a condition of participating in national-vision supply chains and accessing regional capital. Early investment in credible data and disclosure will be rewarded as the region's frameworks tighten in lockstep.

## Sources

- Per-country State of the Nation analyses compiled for the GCC ESG Regulation Tracker
- GCC exchange ESG reporting guidance - ADX, DFM, Tadawul, QSE, Boursa Kuwait, MSX, Bahrain Bourse
- National net-zero strategies and economic-vision programmes across the six GCC states
- ISSB (IFRS S1 / S2), TCFD and central-bank climate-risk supervisory materials (https://www.ifrs.org/groups/international-sustainability-standards-board/)

## About this page

This is interpretive editorial analysis authored for the tracker. It is kept separate from the verified regulatory records that power the site's map, filters and deadlines, and must not be treated as legal advice or as a verified regulatory record. Always confirm against primary sources before acting.

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